Thursday, June 12, 2014

Consumer confidence and tourism

Australians’ consumer confidence may be down, but thus far our love of travelling overseas continues to grow. Held up by the high dollar, Australians continue to holiday overseas. The falling confidence may however be having an impact. The growth of Australians going overseas is lower now than it has been at any time since the GFC.

The growth of Australians holidaying overseas certainly has come off the boil from the heady days of 2010-2011, when the dollar was worth up to $US1.09 and the annual number of Australians going overseas grew by between 10%-20%.

Indeed for the first time this century, the number of international tourists coming to Australia is growing faster than is the number of Australians leaving these shores.

Since 2000, and the Sydney Olympics, the importance of tourism in the economy has steadily declined. It is perhaps the industry most affected by the high dollar. And given just under 5% of all Australian workers are employed in tourism, it’s an industry where our travel choice has a direct impact.

It would be ironic if falling consumer confidence causes more Australians to holiday at home rather than abroad, and thus actually help the economy.

Flight Centre managing director Graham Turner said trading conditions for domestic leisure slowed eight weeks ago and the timing of an upturn was impossible to predict.

“This slowdown in (Australian leisure business) growth was most evident in May and corresponded with the widely reported decline in consumer confidence in Australia,” Mr Turner said.

“While demand often rebounds quickly after a short-term downturn in the leisure market, conditions are uncertain and it is obviously impossible to predict the time frame for recovery.”

It will be interesting in coming months to watch any impact on tourism and travel trends associated with the weakness in consumer confidence and people stay closer to home. It also looks like the capacity war between Qantas and Virgin may be coming to an end with suggestions of higher average airfares ahead.